ID
2021-004

Type
Policy
Sector
Credit Unions and Caisses Populaires
Status
Public comment closed
Date
Comment Due Date

Summary

The Financial Services Regulatory Authority of Ontario (FSRA) is making the supervision of Ontario’s credit unions more transparent and effective.

FSRA is holding a 90-day consultation on its Proposed Sound Business and Financial practices of Credit Unions and Caisses Populaires Rule

Overview

The Sound Business and Financial Practices of Credit Unions and Caissess Populaires Rule introduces a principles-based approach to business and financial practices by setting outcomes for:

  • Member governance
  • Board of Directors governance
  • Senior management
  • Operational management
  • Internal audit, compliance, and finance functions
  • Enterprise risk management
  • Subsidiary governance

The Proposed Rule will be made under the new Credit Unions and Caisses Populaires Act, 2020, once proclaimed into force. It will replace Deposit Insurance Corporation of Ontario (DICO) By-Law No. 5. 

Participate

FSRA is holding a 90-day consultation. FSRA invites comments from June 14, 2021 to September 14, 2021. FSRA is hosting a technical briefing on June 24, 2021 for interested parties. Please register at FSRA's Live Webinar on Ontario's Proposed New Credit Union Rules

Review the Proposed Rule and provide your comments by selecting “Submit a comment or ask a question.”

Useful Link:

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Before we begin, please make sure you do not include any personal or private financial information. If your inquiry does require this information be shared with us, please call us at 1-800-668-0128 or email us at contactcentre@fsrao.ca for instructions.

By submitting your content, you agree to have your materials posted on our engagement portal, used in reports and other materials prepared by Financial Services Regulatory Authority of Ontario (FSRA) that may be shared with the public. Content is moderated so that all posts are respectful and professional. The Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c.F.31, applies to all online content.

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Sector Comment Date posted Sort ascending
Credit Unions and Caisses Populaires
[2021-004] Jon Dessau - Kingston Community Credit Union (KCCU)

October 5, 2021
Credit Unions and Caisses Populaires
[2021-004] Lloyd Smith - FirstOntario Credit Union

October 5, 2021
Credit Unions and Caisses Populaires
[2021-004] DUCA Financial Services Credit Union

October 5, 2021
Credit Unions and Caisses Populaires
[2021-004] Desjardins

October 5, 2021
Credit Unions and Caisses Populaires
[2021-004] Nick Best - Canadian Credit Union Association (CCUA)

October 5, 2021
Credit Unions and Caisses Populaires
[2021-004] Rob Paterson - Alterna Savings

October 5, 2021
Credit Unions and Caisses Populaires
[2021-004] Bernard Brun - Mouvement Desjardins
Bonjour,
Vous trouverez ci-joint les commentaires du Mouvement Desjardins pour cette consultation.
Pour toute question, n’hésitez pas à communiquer avec le soussigné.
October 5, 2021
Credit Unions and Caisses Populaires
[2021-004] Tarmo Lobu - Parama Credit Union
See attached our response to Proposed Sound Business and Financial Practices Rule.
September 14, 2021
Credit Unions and Caisses Populaires
[2021-004] Brigitte Catellier - Meridian Credit Union
Please find attached Meridian Credit Union's comment letter.
September 14, 2021
Credit Unions and Caisses Populaires
[2021-004] Stephen Bolton - Libro Credit Union
Thank you for the opportunity to participate in this critical rule consultation. Our full response is attached.
September 14, 2021
[2021-004] Alex Ciappara - Canadian Bankers Association (CBA)
Hello,

Please consider this letter as the CBA's submission to the FSRAO's consultations on the Proposed Rules - Sound Business and Financial Practices, Capital Adequacy and Liquidity Adequacy for Credit Unions and Caisses Populaires.

If you have any questions or comments, please do not hesitate to contact me at 647-923-9859 or aciappara@cba.ca.

Thank you,

Alex Ciappara
August 31, 2021
[2021-004] Doug Conick - DUCA Financial Services Credit Union
Please refer to the uploaded document for a list of questions/concerns we have thus far. what is uploaded is a compilation from the DUCA Board and Senior Management
June 30, 2021
Credit Unions and Caisses Populaires
[2021-004] Doug Conick - DUCA Financial Services Credit Union
I find the draft rule to be quite prescriptive, almost the opposite of principles based. The rule prescribes a categorization of management into two buckets – oversight (CRO, CFO, Compliance) and Senior Management (CEO and other senior level managers). It prescribes reporting relationships – eg: CRO to the board, possibly the CFO as well (not entirely clear in the rule). It prescribes the nature (job accountabilities) of oversight roles vs senior management and who should be entitled to participate in which meetings.

There are numerous interpretation issues in many sections of the rule that will need clarification. At the end of the day, the language in the rule is crucial as it will be the reference point for those who must comply and those who will review the degree of compliance.

I can’t see how this construct won’t draw the board into management of or involvement in, the day-to-day operations of the credit union, thus violating the CUCPA prohibition per S97 (1) and (2). This relates to the requirement of the CRO reporting to the board, the board having what appears to be final decision rights on the hiring/firing decision for all senior management including CRO, CFO as well as objective setting and others. Senior management objectives define operational work plans and priorities - if the board sets these, how are they not being involved in day-to-day operations? There is language that states the Board's responsibility includes to "direct management". This seems to extend beyond the CEO, if so again how does this not draw the board into day-to-day operations of the CU?

I cannot understand the clear definition of roles and responsibilities of the board versus CEO/Senior Management, nor do I understand the decision rights, business powers of the CEO role. It appears a good chunk of delegated authority to the CEO is being removed under this rule. The language in the rule suggests the board has final hiring/retention and objective decision rights for all of the senior management group as well as CRO, CFO, head of Compliance (as noted earlier)

To comply, it seems as though we would have to deconstruct what we’ve built here at DUCA (deliberately and thoughtfully to support prudent risk and financial management and to strengthen first, second and third lines of defense). For example, to keep the board out of day-to-day operations where the CRO reports to the board: we would need to remove all operational elements from the CRO role. For example (just 2 of many) the loan underwriting and credit adjudication functions. This would require a reorg and new hires to free-up the CRO to be independent from day-to-day operations. Would also have to deconstruct processes we have in place. For example: pricing committee meetings, New Initiative Approval (NIAC) meetings, large chunks of Management Credit Committee Meetings, and Management Risk and Asset/Liability Committee (MRALCO) meetings. This is because we engage in business decision making where CRO and CFO are deliberately asked to weigh in and shape final decisions – in other words they are directly involved in the business/activities that, under the draft rule, they are supposed to be overseeing and independent of (which would not be compliant).

The categorization of senior management into two buckets - oversight (CRO, CRO, Compliance) and others (CEO, others with senior responsibility) along with the definition of independence seems very problematic to implement in practical terms. Does the CRO, CFO, Compliance have any reporting relationship up through to the CEO? if they do, are they no longer independent? Do oversight functions have responsibility for overseeing senior management activity? If so and the oversight roles are also included in senior management, how does this reconcile - how do oversight roles oversee themselves?

Obviously, the preceding points mean significant additional costs, for what will be less effective and efficient decision making. we see the rule as contradicting the well established principles based framework of first, second, and third line of defense. We continue to evaluate -We've found that feedback we provided in pre-consultation has been largely ignored. At this stage, we have serious questions and concerns at the management and board level at DUCA

June 30, 2021
Credit Unions and Caisses Populaires
[2021-004] HARI PANDAY - Meridian
The link for registration "FSRA is hosting a technical briefing on June 24, 2021 for interested parties. Please register at FSRA's Live Webinar on Ontario's Proposed New Credit Union Rules" is not working. I tried registering multiple times but the "Register" button does not activate.
June 14, 2021
No questions have been asked about this consultation yet.